Formula 1, the pinnacle of motorsport, has long been revered for its blend of speed, technology, and prestige. However, despite its global popularity and iconic status, Formula 1 has encountered numerous challenges in its quest to establish a firm foothold in the American market. From misjudging the transition from Netflix to live viewership, to grappling with a lack of competitiveness and a flawed economic model, F1's expansion efforts in America have been met with significant roadblocks, highlighting the complexities of penetrating one of the world's most diverse and competitive sports markets. Liberty Media’s aggressive attempt to forcefully penetrate the American market can serve as a cautionary tale on entering new markets for other companies.
The Rise of F1 in America
In the past, Formula 1's attempts to penetrate the American market have been marred by notable failures, leaving a trail of disappointment among American fans. One such instance occurred in 1981 with the ill-fated Caesars Palace Grand Prix. Held amidst the heat of the Caesars Palace parking lot, spectators endured both physical exhaustion and profound boredom as cars circled monotonously around the casino’s parking lot. Despite a subsequent attempt in '82, the event proved a resounding disaster. Fast forward to 2005, Formula 1's venture into Indianapolis was labeled by renowned commentator Alan Henry as "the most catastrophic public relations disaster in the 56-year history of the official world championship."
Clearly in the past, Formula 1 had encountered formidable challenges in its quest to capture the hearts of American audiences.
In 2017, Liberty Media, an American conglomerate, acquired Formula 1, marking a significant turning point for the sport. With a vision to revitalize Formula 1’s image and attract a younger, broader audience, Liberty embarked on a series of strategic initiatives. Chief among these was the creation of Drive to Survive, a groundbreaking documentary series that offered an unprecedented behind-the-scenes look at the high-stakes world of Formula 1. While the show initially struggled to gain traction, its popularity surged in 2021, coinciding with one of the most exhilarating Formula 1 seasons in recent memory.
The 2021 season, characterized by a fiercely contested title battle between Red Bull driver Max Verstappen (3x World Champion) and Mercedes driver Lewis Hamilton (7x World Champion), served as a catalyst for Formula 1’s burgeoning popularity in America. The influx of new fans, drawn in by the on-track drama and off-track intrigue depicted in ‘Drive to Survive,’ contributed to record-breaking attendances at the Austin Grand Prix, TV viewership increasing by 300,000 from the previous year and injected renewed enthusiasm into the sport.
Lack of Competitiveness
Despite the initial surge in interest fueled by the excitement of the 2021 season, F1 has struggled to maintain momentum in America partially due to lack of competition at the front of the grid. While the drama and unpredictability of the 2021 championship battle captivated audiences, subsequent seasons have failed to replicate the same level of excitement.
In the 2022 and 2023 seasons, the competition at the front of the grid has been very limited as Red Bull and Max Verstappen have dominated and have continued to win grand prixes, in 2023 they won all but 1 race throughout the whole season. Lewis Hamilton said, “no matter how invested fans are in the people, they still want a good sporting show. We have to continue to work on making sure we’re having close racing, because I think you’ve seen the social engagement drop a huge amount this year. It’s obviously heavily impacted (by) competition. People want to see that.” A team dominating is common in Formula 1, Lewis Hamilton won 6 titles for Mercedes between 2014 - 2020, before that Sebastion Vettel won 4 straight titles for Red Bull. In the early 2000s, Micheal Schuemacher and Ferrari won 5 consecutive championships. But what sets apart Verstappen and Red Bull’s dominance is that it shouldn’t have been possible.
In recent years Formula 1 has attempted to make changes to its rulebook to try and cultivate competition, this includes introducing a $145 million cost cap back in 2021 and car design changes in 2022. While there was intense competition throughout the rest of the grid, as 6 teams finished in the top 3, and the Mercedes vs Ferrari battle for second place went down to the last race - Verstappen and Red Bull won all but one race. Totto Wolff the team principal for Mercedes said, “If the spectacle is not good, our fans are going to follow us less, of course, there is the risk that people are going to say, ‘Well, I know the result anyway,’ like it happened to us with Lewis. We’ve just got to do a better job.” Toto was right and the harmfulness of this is being seen now as TV viewership dropped in 2023, which can be attested to the lack of competition at the front of the grid.
Previously, the TV viewership for the sport has risen and then faced a dip like what has happened in 2023, but what is unique about F1’s current predicament is the people who have stopped watching F1. Analyzing responses in surveys from many younger American fans of F1 who were introduced to the sport in 2021, the majority of survey respondents communicated that they stopped watching the sport in 2023 because of the lack of competition at the front of the grid. Many said that since they were introduced in the 2021 season when F1 was at its most competitive and interesting, subsequent seasons haven’t been competitive enough to retain their interest in watching Formula 1. In comparison, many younger fans from Europe communicated the fact that they feel as though Formula 1 is a way of life and it holds strong cultural significance, so despite the lack of competition they would continue to watch grand prixes. Many of the older fans of the sports are accustomed to seeing teams dominate for stretches of time, whereas the younger, newer American fans aren’t used to that and this lack of competition is driving them away from the sport. This is quite troubling for Liberty Media, as their chief initiative was to increase engagement with these younger American fans, but it seems they are now losing them just as quickly as they gained them. This ultimate lack in competition has led to a decline in TV viewership for the sport. TV ratings for the U.S. Grand Prix dropped for the third consecutive year in 2023, pulling a rating of just 0.47 and an average viewership of 882,000. In 2023, ABC saw a decline in viewership for the Miami Grand Prix drop by 26%, and social impressions from 2022 to 2023 declined by 279%. Not just that but, the average viewers per grand prix has decreased by 110,000 from 2022. This decline in viewership is indicative of the challenges facing F1 in retaining the interest of American audiences, especially those who were introduced to the sport during the electrifying 2021 season.
Failed Economic Model
Central to F1's struggles in America is its flawed economic model, which prioritizes selling events to affluent individuals and corporate entities at the expense of grassroots fan engagement. The exorbitant ticket prices for races in cities like Austin, Miami, and Las Vegas have rendered live attendance inaccessible to all but the wealthiest spectators, alienating a majority of the fan base. Over the span of the last three years, ticket prices for each Grand Prix have shown a consistent upward trajectory.
To illustrate, in 2017, the average cost of a three-day admission to the American Grand Prix stood at a modest $142. Fast forward six years to 2023, and that figure had soared to $349. Such dramatic escalations in ticket prices have rendered it increasingly challenging for the average Formula 1 enthusiast to secure tickets and relish the live spectacle of their beloved sport. Notably, when juxtaposed with other major sports leagues in America, Formula 1 emerges with the highest Fan Cost Index (FCI), encompassing ticket prices, parking fees, food expenses, and merchandise costs—a comprehensive measure of the entire fan experience. For instance, the Miami Grand Prix boasted an FCI of $2,300, dwarfing even the highest FCI among NFL teams, which was the Dallas Cowboys at $664. These exorbitant costs have effectively priced out many ardent Formula 1 followers, transforming what should be impassioned spectacles of sporting prowess into corporate affairs, predominantly attended by affluent individuals.
Chasing after the big spenders for quick cash might sound tempting, but it's putting Formula 1's bond with regular fans at risk. When Formula 1 focuses on snagging folks who just pop in for one race and aren't really into the sport, they risk ditching the loyal fans who stick around for the long haul. This whole money-first approach shows Formula 1's got its eyes on the short-term prize, forgetting that building real connections with everyday fans is what keeps the sport alive in the long run. Your average Formula 1 fan? They're the ones tuning into every Grand Prix on TV, chatting about it non-stop on social media, and purchasing up team gear. By only going after the rich crowd, Formula 1 might end up waving goodbye to these die-hard fans while chasing those quick bucks.
Besides just missing the mark with their target crowd, Formula 1's actions have left a sour taste, painting a picture of prioritizing money over fan enjoyment. Take the Las Vegas Grand Prix, for instance. The first practice session, which set fans back around $1000 a ticket, got canceled after a measly eight minutes thanks to a dodgy manhole cover. Fans who'd been camping out for hours got the boot at 1:30 in the morning, and to add insult to injury, the compensation from F1 was nowhere near the price paid for tickets. On top of that, F1 management decided to clamp down on non-paying fans, going as far as obstructing views from bridges and buildings, chopping down trees near the Bellagio, and causing chaos on public transport during stand construction. These moves not only angered Las Vegas locals but also painted F1 as cash-hungry and more interested in lining their pockets than giving fans a good time, especially in the eyes of American audiences. It's incidents like these that chip away at the sport's reputation and drive a wedge between fans, making it harder for Formula 1 to win back trust and loyalty in the US.
Moreover, Formula 1 appears to have miscalculated the potential live audience stemming from its Netflix viewership. While someone willing to invest in a $15 Netflix subscription may not balk at the cost, shelling out $1500 for a ticket is an entirely different proposition. Compounded by the reality that the actual live experience may not match the heightened excitement portrayed in the show, it's understandable why new enthusiasts might hesitate. For middle-income fans, the financial leap to attend live races is often overwhelming. Formula 1 must acknowledge that pricing races too steeply risks alienating its genuine American fan base. Surveys among middle-income Formula 1 enthusiasts in the US consistently reveal cost as the primary barrier to attending races. Moreover, there's a pervasive sentiment that Formula 1 neglects affordability concerns, leaving many feeling marginalized by the sport. This underscores Formula 1's flawed economic strategy, which prioritizes catering to the wealthy elite over cultivating a sustainable fan base among loyal supporters from diverse financial backgrounds.
No True American Team
Another key factor hindering F1's expansion in America is the absence of authentic American representation within the sport. Some teams like the Haas F1 Team have sought to promote an American presence in F1 by being owned by an American company and having an American owner. However, the team's predominantly European operations and a lack of on-track success have contributed to a failure to resonate with American audiences. The biggest issue as of late was Formula 1’s decision to reject Andretti Autosport from joining the grid. Andretti Autosports is an American racing team that has a rich history when it comes to racing. They competed in series such as the IndyCar and Formula E, and have been incredibly successful as they won numerous world championships in these different series. Andretti Autosport had partnered with Cadillac and General Motors to make a bid to join Formula 1 in the 2025 season, but were rejected by Formula 1 in early March with a contentious decision that shocked the racing world. Formula 1 justified the rejection saying that adding a 11th team to the grid would make it more difficult logistically for race event planning and physically would take up space from other teams. Furthermore, Formula 1 felt that the team would not be competitive in 2025 and the new set of regulations in 2026 would further disrupt the team's ability to compete. While it is true that joining the grid in 2025 may make Andretti Autosport uncompetitive as they would be a very new team, a new set of regulations the following year combined with a cost cap applicable to all teams will change the grid as every team will be in the same position of trying to understand the new cars. Any concerns due to physical space constraints and logistics issues aren’t relevant as Formula 1 approved 13 teams for the grid back in 2010.
The explanations offered by Formula 1 failed to appease the racing community, prompting questions into the rejection of Andretti Autosport and casting doubt on Formula 1's genuine commitment to involving America in the sport. Andretti Autosport, renowned for its extensive years in racing and the loyalty of its fanbase, held the potential to attract a substantial following of American enthusiasts, which could have enriched the sport's fan base. Rejecting Andretti Autosport's bid to join the sport represents a missed opportunity to cultivate a genuine American presence and tap into the rich heritage of American motorsport. This exclusionary approach only serves to alienate fans and reinforces the perception that F1 prioritizes profit over inclusivity. These actions give the appearance that F1 is interested in the money and facilities America provides, but have no interest in letting America be a part of the sport.
Navigating the Gridlock
Formula 1's struggles to expand its presence in America underscore the importance of understanding local markets and catering to the preferences of diverse fan bases. While the allure of high-profile events and glamorous locations may yield short-term gains, the long-term sustainability of Formula 1's presence in America hinges on fostering competitiveness, affordability, and inclusivity. By addressing these key challenges and prioritizing fan engagement over financial gain, Formula 1 can unlock the full potential of the American market and secure its position as a leading force in global motorsport. As the sport continues to evolve, it is imperative that Formula 1 remains attuned to the needs and desires of its American fan base, cultivating a lasting legacy that transcends borders and celebrates the rich tapestry of motorsport culture.
